Fresh Scents makes a variety of candles that it sells to retailers across the Western part of the country. It sells scented candles in a jar and tapers of various colors to one of its major customers, Wickers Candle Works. Since the only thing that changes when a different scent or color is used is a small amount of scent and a change in dye color, Fresh Scents treats all sales for the type of product as the same because its cost to produce any scent or any color is basically the same. The following is the information Fresh Scents has obtained for Wickers Candle Works.

REQUIRED:

a. Calculate the following variances:

Total available market variance

Market share variance

Sales price variance

Manufacturing cost variance

Variable SG&A spending variance

Fixed SG&A spending variance

b. How does the Wickers Candle Works account look? What recommendations would you make to Fresh Scents’ management?

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Plan Actual Revenues $362,500.00 $491,625.00 Less: Cost of goods sold $164,250.00 $230,625.00 Gross margin $198,250.00 $261,000.00 Variable SG&A $30,812.50 $43,017.19 Fixed SG&A $150,000.00 $150,000.00 Total SG&A $180,812.50 $193,017.19 Income before tax $17,437.50 $67,982.81 Fresh Scents Scented Candles Wickers Candle Works overall purchase of scented candles 250,000 300,000 Goodman's share of Wickers Candle Works scented candles sales C) 20% 25% Averoge price $5.00 $4.80 Averoge manufucturing cost $2.25 $2.10 Fresh Scents Tapered Candles Wickers Candle Works overall purchase of tapered candles 300,000 325,000 Goodman's share of Wickers Candle Works tapered candles sales C%) 15% 18% Average price $2.50 $2.25 Averoge manufacturing cost $1.15 $1.25 Cost behaviors: Variable cost of SG&A as percent of revenue 8.50% 8.75% Fixed cost of SG&A $150,000 $175,000